Leafs Hockey Club Inc. and its Leafs Ice Centre in West Dundee are expected to file a reorganization plan in late September after a bankruptcy court allowed it to restructure its debt, according to court documents.
Wells Fargo Bank, which filed a foreclosure suit last December against the amateur hockey organization, sought to appoint a Chapter 11 trustee. But the U.S. Bankruptcy Court judge allowed the hockey organization to retain control and have the opportunity to provide the restructuring plan.
William Pfeiffer Smith, a lawyer representing Wells Fargo, declined to comment, and another Wells Fargo executive did not immediately return a call. Elizabeth Ellen Greene, the lawyer representing Leafs Hockey Club, did not immediately return a call for comment.
Wells Fargo said $20 million in bonds were issued to construct and operate the hockey arena with an agreement in 2007. However, the hockey organization failed to make payments on the bonds in March 2010, September 2010 and September 2012, so the bank sued for foreclosure, court documents said.
Then last February, Leafs filed Chapter 11 bankruptcy. As a result, Wells Fargo also sued for breach of contract and full payment of the debt, along with attorney fees, costs and expenses. Besides the $20 million in unpaid principal, interest was more than $821,000 and continues to accrue by $3,395.24 per day, court documents said.
Leafs said in court documents that it has positive cash flow and will provide a distribution plan to all creditors. The deadline is Sept. 30.